News Mar 25, 2024 01:10 PM EDT

Maximize Your Forgiveness! Key Steps to Take Before the April Student Loan Deadline

By April Fowell

A crucial deadline has been set by the Biden administration for holders of student loans who want to be forgiven.

Maximize Your Forgiveness! Key Steps to Take Before the April Student Loan Deadline

A crucial deadline has been set by the Biden administration for holders of student loans who want to be forgiven.
(Photo : by Chip Somodevilla/Getty Images)

Debt Consolidation and Loan Forgiveness

Individuals with many federal student loans who ask for a consolidation before April 30th, which would result in a single, bigger debt, may be eligible for the U.S. Redesign of income-driven repayment schemes by the Department of Education.

Over 930,000 people have already had their debt cancelled as a result of those adjustments, and $45 billion in relief has been provided.

Income-driven repayment plans are based on a portion of the borrower's discretionary income and were first introduced in 1994. These payments are usually less than those made under normal repayment terms, and in certain cases, they are nonexistent

Depending on the arrangement, borrowers usually receive their remaining debt erased after 10, 20, or 25 years.

The fact that participants in these programs sometimes have numerous loans that were taken out at various times is one complicated element, according to Kantrowitz.

This might imply that a borrower has different deadlines for loan forgiveness for each of those loans.

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Loan Consolidation and Forgiveness Opportunities

Currently, the Biden administration is allowing borrowers to temporarily bundle their debts and receive credit back up to the date of the first loan payment on the oldest loan in the bundle.

Let's take an example where a borrower completed their undergraduate studies in 2004, took out additional loans for a masters degree in 2018, and is currently repaying these loans on an income-driven plan that has a 20-year forgiveness period. Experts suggest that if they consolidate, they may be eligible for instant loan forgiveness on all of those debts.

When things are normal, consolidating student loans might be a bad idea for people who want to pay off their debt since it restarts the forgiveness period. However, through April 30, the Biden administration has modified that program's details.

According to Kantrowitz, consolidation is an option for all federal student loans, including Parent Plus, Perkins, and Federal Family Education Loans.

Applying for a Direct Consolidation Loan is possible through your loan servicer or at

If they choose to participate in the new income-driven repayment option, known as the SAVE plan, certain borrowers who took out small sums may even be eligible for cancellation after making payments for as little as ten years.

Since your bill under an income-driven repayment plan is dependent on your salary and not your overall debt, consolidating your loans shouldn't result in an increase in your monthly payment, according to Kantrowitz.

The weighted average of the interest rates on all of your loans will be your new interest rate. According to Elaine Rubin, director of corporate communications at Edvisors, a company that assists students with managing college expenses and borrowing, it could be a good idea to obtain a complete payment history of each loan before consolidating in order to ensure that you are later receiving the full credit you are entitled to.

By checking into your loan data, you should be able to acquire a history of your payments at A full record can also be requested from your service provider. According to Rubin, the payment history is based on the date the loan was initially repaid, not the original loan amount.

She said that borrowers can file a complaint with the Federal Student Aid branch of the Department of Education or speak with their loan servicer if they think there is a problem with their payment count.

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